Visa, MasterCard in $6B settlement over card fees

FILE - This Sept. 5, 2007, file photo shows credit card decals on a store window in the Hollywood section of Los Angeles. isa, MasterCard and major banks agreed to pay retailers at least $6 billion to settle a long-running lawsuit that alleged the card issuers conspired to fix the fees that stores pay to accept credit cards. As part of the settlement, announced late Friday, July 13 stores from Rite Aid to Kroger will be allowed to charge customers more if they pay using a credit card. (AP Photo/Nick Ut, File)
— AP

FILE - This Sept. 5, 2007, file photo shows credit card decals on a store window in the Hollywood section of Los Angeles. isa, MasterCard and major banks agreed to pay retailers at least $6 billion to settle a long-running lawsuit that alleged the card issuers conspired to fix the fees that stores pay to accept credit cards. As part of the settlement, announced late Friday, July 13 stores from Rite Aid to Kroger will be allowed to charge customers more if they pay using a credit card. (AP Photo/Nick Ut, File)
/ AP

But up until now, Visa and MasterCard have banned stores from charging customers who use credit cards more. Merchants, however, have been allowed to offer customers discounts if they pay with cash. Some gas stations do this, for example.

As part of the settlement, credit card companies have agreed to reduce swipe fees for eight months. The temporary reprieve on fees is valued at $1.2 billion. The settlement does not apply to debit cards, which have grown in popularity for small-value transactions.

"These new rules will give merchants the tools they need to put pressure on the credit card networks to lower interchange or swipe fees, which are the second-or third-highest cost of doing business for many retailers," said Patrick J. Coughlin, senior trial counsel at Robbins Geller Rudman & Dowd LLP, and one of the lawyers for the plaintiffs.

Joseph W. Saunders, chairman and chief executive of Visa Inc., said in a statement Friday that he's comfortable with the agreement, which he believes will not affect the company's earnings outlook.

"We believe settling this case is in the best interests of all parties," he said.

Noah Hanft, MasterCard Inc.'s general counsel, said in a separate statement on Friday that the decision to settle "was based on our belief that MasterCard and our stakeholders are best served by an amicable resolution."

"Although we have strong defenses to all claims, a settlement avoids years of litigation and uncertainties that are inherent in such cases," he said. "We believe that today's settlements should resolve all issues with the merchant community."